spot_img

European Union ripe for Cambodian dried fruit exports

Brian Badzmierowski

Cambodian dried fruits might be more expensive if and when they reach European shelves, but increasing demand for healthy snacks in Europe may open the door for some export-focused businesses to break into a new market.

Mangoes, bananas, pineapples, and papayas have the most potential as consumer preferences in Europe shift from sweet and salty snacks to more health-conscious and sustainable fruit snacks. 

The market for dried tropical fruit is expected to grow by five to six percent per year over the medium to long term.

Speaking at a training session for potential exporters hosted by the European Chamber of Commerce, European import expert Ferry Böhnke said Cambodian exporters should be seeking partnerships directly with European importers to increase profitability.

Currently, 98 percent of Cambodian dried fruits are sent to China and 90 percent of the production of tropical fruits is exported to Thailand and Vietnam, where they are typically processed and re-exported.

To read more about US AID’s harvest project click here.

Maria Kapil, a project director at Germany-based global development firm Sequa, said by cutting out the middlemen and directly approaching importers, Cambodia could shave costs and establish long-lasting partnerships.

While Cambodia can’t compete with the shipping costs or productivity offered by competitors like Vietnam and Thailand, there is a niche market to fill, Böhnke said, adding that Vietnamese and Thai products are not necessarily known for their quality.

Sustainable supply chains, fair trade certifications, and organic products are fast becoming consumer priorities and if Cambodia can produce high yields of quality products, exporters, farmers, and processors stand to benefit.

Cambodia can also take advantage of preferential tariffs as part of the EU’s Generalised Scheme of Preferences. All products imported directly from Cambodia are tariff-free, but a 5.8 percent tax applies if a third country is involved. To achieve tariff-free exports, the product must originate from Cambodia and its sugar weight cannot exceed 40 percent of the final product weight.

A long road to the EU 

The blueprint is there, and EuroCham released its Exporting Dried Tropical Fruits from Cambodia to Europe guide at the training session Friday to provide market links and recommendations to exporters keen to enter the EU market.

Certifications, quality assurance, shipping costs, and productivity pose the largest problems.

It took Rattana Phal, the commercial manager at Misota Food, two years to receive his ISO certification, the standard international certification for businesses across the globe. The EU market also has strict requirements for all foods and packaging entering the market and he said adhering to each different set of requirements made it unfeasible to export at the moment.

EuroCham hosts workshop on Cambodia exporting dried fruits.

Business owners gathered at Baitong also agreed that logistics and shipping costs presented glaring problems, with the high price of shipping alone severely de-incentivizing exporting.

Currently, these hurdles aren’t easy to overcome domestically, with proper packaging and processing services not yet widely available. Outsourcing these services to neighboring countries takes time and money, decreasing the profitability of potential exports to the EU. 

Strengthening the supply chain

Sothearina Uy, the vice president of Navita Healthy Foods & Beverages, said she faces problems ensuring the quality and quantity of products with farmers, with a lack of market knowledge weighing down what could be a more efficient and profitable industry.

As the panelists gathered mentioned, the exporter is responsible for the entire process before goods are shipped, and if farmers are not properly trained or don’t have the equipment to succeed, EU exports aren’t likely to happen.

“One of the critical points is controlling the supply chain successfully and being really dedicated to training farmers and offering technical advice,” Böhnke said.

Ensuring the end consumer always stays in mind is another priority that sometimes gets overlooked. Many exporters think about production but forget about market research. It’s just as vital as producing,” he added.

Misota is one of the larger companies that could make a splash and Phal said company representatives will travel to Germany in July to seek business partners.

Despite the hurdles, the agricultural sector is trending in the right direction. Exports rose by 64 percent in 2021 over 2020 and were up 11 percent year-on-year during the first quarter of 2022.

To read more about increase shipping and logistics costs click here.

Christoph Janensch, a Business Scouts for Development representative at German development agency GIZ — which co-sponsored the export guide — said GIZ is working to modernize the farming industry. Currently, it can’t match the production of rivals like Thailand.

“This calls for modernization, consolidation of small-scale farmers, and improved agri tech adoption rates,” he said.

Song Kheng Leang, the managing director at CSL Enterprises, was one of the most optimistic of the business owners gathered and said it’s an inevitability that sooner or later, Cambodian dried fruits will reach the EU. 

“Give it five years. In five years, we will be exporting to the EU,” he said.

Telegram Channel

Cambodia's best investment news & views direct into your Telegram account.

spot_img

Related Posts

spot_img